Multiple Catalysts Lift Markets, Week In Review

Week in Overview

• Asian equities ended a comparatively optimistic week on a excessive word as web shares rebounded following a hunch earlier within the week on excessive brief volumes and index rebalancing.
• A number of China financial releases this week painted a blended image because the Caixin (non-public) manufacturing PMI outpaced the official measure because the latter indicated enlargement whereas the previous indicated contraction.
• EV gross sales information from a number of firms was launched on Thursday with BYD seeing robust gross sales of 1 million models to this point this yr.
• A number of overseas executives have been in China this week together with Tesla’s Elon Musk and JP Morgan’s Jamie Dimon.

Friday’s Key Information

Hong Kong outperformed the area on robust quantity led by web shares.

Was there brief masking in a single day in Hong Kong? 100%, as we famous the uptick briefly volumes all this week. Extra importantly, we had optimistic catalysts that introduced patrons again in. US-listed China shares gained yesterday on robust preliminary outcomes from JD.com’s 618 Grand Promotion purchasing competition.

Alibaba’s November 11^th “Singles Day” purchasing occasion is well-known, although JD.com’s competing 618 occasion is comparable in providing reductions to shoppers. The early robust outcomes point out that reviews of the demise of the Chinese language client have been grossly exaggerated.

Additionally, the Caixin Manufacturing PMI beat expectations yesterday, remaining in development territory, which obtained ZERO media consideration yesterday. “If it bleeds it leads” because the “official” PMI’s miss was headlines information earlier within the week. Did you see any articles on the Caixin PMI’s beat? Me neither.

Could electrical car (EV) gross sales figures, particularly BYD’s numbers, have additionally helped as there are rumors that there may be additional EV coverage assist coming. Markets additionally appreciated the idea that Fed climbing in June and July, after which pausing, highlighted in yesterday’s word, additionally helped. CNY and the Asia Greenback Index gained +0.57% and +0.59%, respectively, versus the US greenback on the potential pause. A decision on the US debt ceiling is an apparent optimistic as nicely.

These positives come towards the backdrop of low China possession amongst asset allocators, particularly in the US. A number of strategists I respect have famous that China possession ranges have fallen again to October 2022 ranges. After all, the market does what’s least anticipated, i.e. the ache commerce is greater (fingers crossed). Wednesday’s fall could have been a capitulation backside, particularly in Hong Kong, although each Shanghai and Shenzhen are sitting on assist ranges (fingers nonetheless crossed). General, I consider we usually tend to see excellent news going ahead, apart from China’s manufacturing weak spot resulting from slowing world development.

Actual property was the perfect performing sector in each Hong Kong, the place it gained +9.58%, and Mainland China, the place it gained +4.43% on chatter that property stimulus is coming. After the shut in Hong Kong, Bloomberg reported that coverage makers are engaged on extra actual property measures. Sluggish property gross sales and declining property costs haven’t solely weighed on client confidence, but additionally have upstream and downstream financial results. Constructing stuff requires cement, metal, copper, and so on., which explains the pop in commodity costs in a single day.

Northbound Inventory Join influx was a robust at $1.2 billion in a single day, although it was fascinating that Mainland buyers have been web sellers of Hong Kong shares by way of Southbound Inventory Join. Tencent and Meituan have been average web buys by way of Southbound Inventory Join in a single day.

LVMH CEO Bernard Arnault is anticipated to go to China.

In the meantime, Bloomberg had an fascinating article on Exxon’s success in China. The oil big is investing $10 billion to construct a petrochemical plant within the nation. Exxon has been doing enterprise in China since 1892, in keeping with Exxon’s China head Fernando Vallina.

Nvidia’s Jensen Huang is anticipated to go to China this month. Businesspeople are getting alongside simply nice as they’re getting on planes and assembly with each other. Is perhaps time for politicians to do the identical!

The Hold Seng and Hold Seng Tech indexes gained +4.02% and +5.33%, respectively, on quantity that elevated +16.05% from yesterday, which is 126% of the 1-year common. 470 shares superior whereas 49 shares declined. Principal Board brief turnover elevated +4.5% from yesterday, which is 119% of the 1-year common, as 16% of turnover was brief turnover. Development elements outperformed worth elements, as small caps outpaced giant caps. All sectors have been optimistic as actual property gained +9.57%, client discretionary gained +6.72%, and communication providers gained +5.71%. All subsectors have been optimistic as retail, software program, and actual property have been the highest performers. Southbound Inventory Join volumes have been average/excessive as Mainland buyers bought a web -$309 million price of Hong Kong shares as Kuiashou was a small web purchase, and Tencent and Meituan have been average/giant web buys.

Shanghai, Shenzhen, and the STAR Board diverged to shut +0.79%, +1.16%, and -0.02%, respectively, on turnover that decreased -4.48% from yesterday, which is 101% of the 1-year common. 3,264 shares superior whereas 1,411 shares declined. Development and worth elements each carried out nicely, whereas small caps outpaced giant caps. All sectors have been optimistic as actual property gained +4.68%, supplies gained +3.91%, and client discretionary gained +3.44%. The highest-performing subsectors have been family merchandise, family home equipment, and constructing supplies. In the meantime, pc {hardware}, aerospace/navy, and training have been among the many worst. Northbound Inventory Join volumes have been average as overseas buyers purchased a wholesome $1.209 price of Mainland shares as Kweichow Moutai a average/giant web purchase, Ping An insurance coverage was a average/small web promote, and China Tourism Group Obligation Free was a small web promote. CNY and the Asia Greenback Index gained +0.57% and +0.59%, respectively, versus the US greenback. Treasury bonds bought off, whereas copper and metal gained.

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Final Evening’s Efficiency

Final Evening’s Alternate Charges, Costs, & Yields

• CNY per USD 7.08 versus 7.10 yesterday
• CNY per EUR 7.61 versus 7.64 yesterday
• Asia Greenback Index +0.59% in a single day
• Yield on 1-Day Authorities Bond 1.50% versus 1.57% yesterday
• Yield on 10-Yr Authorities Bond 2.70% versus 2.68% yesterday
• Yield on 10-Yr China Improvement Financial institution Bond 2.85% versus 2.84% yesterday
• Copper Value +0.98% in a single day
• Metal Value +1.60% in a single day